The Survey of Major Labour Costs (MLC) obtains information from employing businesses about the main labour costs incurred as a consequence of employing labour. The MLC survey has been conducted on an irregular basis since 1985-86 and was most recently conducted in respect of 2002-03. (footnote 1)

The MLC collects information on the following components of labour costs:

employee earnings

employer contributions to superannuation

payroll tax

workers' compensation costs

fringe benefits tax.

These costs are measured on a cash accounting basis, net of any reimbursements, subsidies or rebates.

A number of labour costs have not been covered by this survey. These include training, costs associated with employee welfare services, and recruitment. With the exception of training costs, these items are not considered to make a significant contribution to total labour costs. (footnote 2)

Total labour costs

Total labour costs incurred by employers in 2002-03, as defined in the MLC survey, were $354,150m (table 6.59). Total labour costs for the private sector were $270,330m, representing 76% of the labour costs of all employers. Total labour costs for the public sector, which includes public trading and financial enterprises as well as Australian (Commonwealth), state and local government departments and authorities, were $83,821m.

6.59 MAJOR LABOUR COSTS, By sector

Other labour costs

Earnings

Superannuation

Payroll tax

Workers' compensation

Fringe benefits tax

Total

Total labour costs

$m

$m

$m

$m

$m

$m

$m

Private

233,955.8

20,086.4

7,708.3

6,276.3

2,302.7

36,373.7

270,329.6

Public

72,653.5

6,843.7

2,412.4

1,538.6

372.5

11,167.2

83,820.7

Commonwealth

13,450.3

1,163.3

294.4

176.4

118.9

1,753.0

15,203.3

State

53,323.4

5,203.9

2,090.6

1,155.4

214.6

8,664.4

61,987.8

Local

5,879.8

476.6

27.5

206.8

39.0

749.9

6,629.6

All sectors

306,609.3

26,930.1

10,120.7

7,814.9

2675.2

47,540.9

354,150.3

Source: Labour Costs, Australia (6348.0.55.001).

Components of labour costs

Table 6.59 shows the largest component of labour costs was employee earnings ($306,609m), which accounted for 87% of total labour costs. Earnings, as defined in the MLC, includes gross wages and salaries, the value of salary sacrificed (excluding fringe benefits tax), the ungrossed value of fringe benefits provided by employers through arrangements other than salary sacrifice, and severance, termination and redundancy payments.

Superannuation was the next largest labour cost after earnings, with a total value of employer contributions paid on behalf of employees of $26,930m (8% of total labour costs). Payroll tax accounted for $10,121m (3%), Workers' compensation costs $7,815m (3%), and Fringe benefits tax $2,675m (1%).

Labour costs per employee

In 2002-03 total labour costs per employee were $42,578 (table 6.60). Labour costs per employee varied considerably across industries, with the mining industry having the highest labour costs per employee of $96,399, followed by the electricity, gas and water supply industry with $75,361. These high labour costs per employee industries reflect the high level of earnings in these industries.

The service-related industries had the lowest labour costs with the accommodation, cafes and restaurants, and retail trade industries recording labour costs per employee of $23,934 and $25,061 respectively. In part, this reflects the high proportion of persons in these industries who are employed part-time (49% in accommodation, cafes and restaurants, and 47% in retail trade in 2002-03). In contrast, the proportion of part-time employees in mining, and electricity, gas and water supply - the two industries with the highest labour costs per employee - was only 3% and 5% respectively.

Table 6.60 also shows industries that traditionally involve a high degree of manual labour had the highest per employee workers' compensation costs. The mining industry recorded a per employee workers' compensation cost of $3,026, followed by the construction ($1,871) and manufacturing ($1,652) industries. This could reflect the higher premiums as a result of the increased risk of physical injury in these industries.

6.60 MAJOR LABOUR COSTS PER EMPLOYEE, By industry

Other labour costs

Superannuation

Payroll tax

Workers'
compensation

Fringe
benefits tax

Total

Total labour costs per employee

Earnings$

$

$

$

$

$

$

Mining

81,335

6,040

4,297

3,026

1,701

15,064

96,399

Manufacturing

43,510

3,624

1,985

1,652

526

7,787

51,297

Electricity, gas and water supply

64,296

5,669

3,534

1,147

715

11,065

75,361

Construction

37,397

3,237

821

1,871

*191

6,120

43,517

Wholesale trade

41,723

3,774

1,501

881

891

7,047

48,770

Retail trade

21,958

1,801

662

527

113

3,103

25,061

Accommodation, cafes and restaurants

20,844

1,712

561

737

81

3,090

23,934

Transport and storage

43,871

3,740

1,951

1,631

278

7,600

51,471

Communication services

56,611

(a)1,635

2,854

869

698

6,057

62,667

Finance and insurance

52,395

3,626

2,521

373

930

7,451

59,846

Property and business services

37,435

3,545

1,108

594

314

5,561

42,996

Government administration and defence

45,056

4,856

842

889

297

6,884

51,940

Education

38,598

4,028

1,605

589

144

6,365

44,963

Health and community services

35,443

3,210

219

939

85

4,454

39,897

Cultural and recreational services

28,404

2,384

994

505

247

4,131

32,535

Personal and other services

34,154

3,295

1,173

1,182

224

5,873

40,027

All industries

36,855

3,240

1,221

939

323

5,722

42,578

(a) The superannuation costs of the Communication services industry were particularly affected by the use of surplus funds in some defined benefit schemes to offset employer contributions.

Source: Labour Costs, Australia (6348.0.55.001).

Endnotes

1Estimates for the 2002-03 MLC were published in Labour Costs, Australia (6348.0.55.001). <Back